Endogenous timing in quality choices and price competition

Arbeitspapier

The authors modify the price-setting version of the vertically differentiated duopoly model by Aoki (Effect of Credible Quality Investment with Bertrand and Cournot Competition, 2003) by introducing an extended game in which firms noncooperatively choose the timing of moves at the quality stage. Their results show that there are multiple equilibria in pure strategies, whereby firms always select sequential play at the quality stage. They also investigate the mixed-strategy equilibrium, revealing that the probability of generating out-of-equilibrium outcomes is higher than its complement to one. In the alternative case with full market coverage, the authors show that the quality stage is solved in dominant strategies and therefore the choice of roles becomes irrelevant as the Nash and Stackelberg solutions coincide.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economics Discussion Papers ; No. 2013-37

Classification and Topics

• Classification: Wirtschaft ; Noncooperative Games ; Oligopoly and Other Imperfect Markets
• Subject: Endogenous timing ; product quality ; market coverage

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lambertini, Luca ; Tampieri, Alessandro
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/77946
• Last update: 10.04.2025, 8:49 AM CEST